Americans are angry about AI data centers, and there's a good chance they'll take out their frustration at the ballot box on Tuesday.
From tech giants to utilities, companies involved in the data center buildout are at risk of backlash. Polls have found that Americans think data centers inflate home energy costs and are bad for the environment. Most don't want any built in their neighborhoods.
The way the election could affect companies, however, is a little nuanced, and will be more evident on the state and local levels.
That's because the industry has some protection on the federal level. President Donald Trump is a fan of AI and will probably resist attempts to rein in its growth and adoption.
On the state level, it's a different story. In particular, races in Georgia, Texas, and Arizona could determine how many data centers get built and whether utilities can profit off them. Shares of Oracle, which is expected to use power from data centers in Texas and Arizona, could come under additional pressure if the votes don't go in AI's favor. Utilities like Georgia's Southern Co. and Arizona's Pinnacle West, and energy firm Sempra, which operates in multiple states including Texas, could also face downside in their stocks.
AI data centers are at the center of several election campaigns, including high-profile toss-up political races in Texas and Michigan.
In Texas, data centers have taken center stage in the governor's race, where incumbent Greg Abbott, a Republican, is facing an unexpectedly fierce challenge from Democrat Gina Hinojosa. Hinojosa, who pledged to "end costly data center madness" as one of her top three priorities, pulled ahead in the latest New York Times/Siena poll released Sunday, though her lead was within the margin of error and Abbott has led most polls until now.
Abbott issued a temporary data center moratorium in August, saying the state needs to audit operators before they can move ahead. But Hinojosa argues that the temporary pause doesn't go far enough, and says that data centers should stop until the legislature passes tougher laws, including rescinding state tax breaks. Abbott's campaign didn't immediately respond to a request for comment.
Stricter rules in Texas could limit growth at Sempra, which is investing heavily in electrical infrastructure in West Texas to serve data centers and others, and utilities CenterPoint Energy and American Electric Power, which are benefiting from Texas' AI-driven boom in electricity demand. Texas companies building large data center campuses like Fermi could also face new uncertainties.
Governors' races aren't the only venues where data centers are getting scrutiny. Voters in several states elect members of their public utility commissions, which vote on consumer electricity rates and determine whether utilities can recover the costs of their investments.
Two public commission races worth watching are in Georgia and Arizona. In Georgia, Democrats could take majority control of the commission after already winning two seats last year. If they do, it could limit earnings growth from AI for Southern Co., whose efforts to serve data centers in the state have angered some voters.
Southern has said that data centers will actually cause rates to decline because big tech companies pay so much for power that they reduce the burden on other users. The company pledged to hold consumer rates steady through 2028. But analysts say that the commission could limit its profits afterward, depending on the election results.
"Regulatory pushback is brewing, particularly in Georgia, home to about two-thirds of Southern's earnings and planned investment," Morningstar analysts wrote last week.
In Arizona, a Democratic victory in a similar commission race could limit growth at utility Pinnacle West, which serves the state and is attracting enormous interest from data centers.
Data centers are also directly on the ballot in dozens of communities nationwide. There are 41 ballot initiatives around the country Tuesday that allow voters to weigh in on whether they want the warehouses built in their communities, according to Ballotpedia. Ohio has 21 of them, the most of any state.
Six data-center-related ballot questions have already been decided in elections that took place earlier this year in New Hampshire, Wisconsin, California, and Michigan, and the outcome isn't promising for business. All six resulted in "yes" votes for new limits on data-center development, according to Ballotpedia.
If the AI pushback shows up again at the polls on Tuesday, it could show up in the stock market on Wednesday.
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